Old sayings like "time is money" and "seeing is believing" offer a great deal of wisdom. Now imagine combining the two: do things very fast while you can see them and that can bring you "money" via stocks or investments you can believe in. Vast improvements in electronic processors - e.g., from Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD), memory and storage, - e.g., SanDisk (NASDAQ:SNDK), EMC Corp. (NYSE:EMC), HD Supply Holdings (NASDAQ:HDS), as well as fast algorithms have brought incredible speed to computing devices. This is complemented with advanced fiber-optic and wireless network technologies from Alcatel-Lucent (NYSE:ALU), Verizon (NYSE:VZ), AT&T (NYSE:T), Huawei that transmit, transport and route information at 10s of gigabit (billions of bits) per second. The good news is that further speed and transport capacity improvements are yet to come via breakthrough technologies that will incorporate nanotech, quantum computing, as well as added development and optimization of current platforms. I look forward to elaborating on these in future SA articles.
But here I'll focus on the visual technologies and markets. Back in the late 1990s and early 2000s, a bandwidth glut was created for the fiber-optic and IT industries because "killer" applications were missing. Of course the geopolitical turmoil and a recession that followed didn't help either. Thankfully, now, transported information or content is not only processed fast but also attractively displayed for the end user who has the freedom to move around - thus wiping out the bandwidth glut concern and putting industries back on fast tracks for more bandwidth, electronic gadgets and contents of all sorts including infotainment. Many tech companies have received nice boosts, particularly due to the advancement of the display industry enabling numerous apps, which has lured consumers toward mobile computing devices and large, flat-screen TVs, businesses and public institutions are utilizing electronic billboards to display information relating to commercial, educational, sports and entertainment. Key technologies behind the display industry's advancement are based on LEDs (light emitting diodes) and OLEDs (organic light emitting diodes). There are many large and small public and private companies involved in making or developing LEDs and OLEDs. Some notable companies for LEDs are Nichia, Avago (NASDAQ:AVGO), Cree (NASDAQ:CREE), Osram (DE:OSR), and Philips (NYSE:PHG), although some of these also make OLED materials, OLED products are dominated by Samsung (OTC:SSNLF) and LG (NYSE:LPL).
LEDs and OLEDs use different materials and as a result have unique advantages and disadvantages for display and lighting applications. LEDs are made using "man-made" atomic crystals referred to as inorganic semiconductors. In contrast, OLEDs are made from organic compounds based on small molecules or polymers. LEDs and OLEDs are both diodes with electroluminescent properties, i.e., they produce light when electric current passes through the material, which only occurs when the anode contact is kept at a higher voltage than the cathode. Due to similar names and operation mechanism, LEDs and OLEDs often cause confusion and false expectations for marketers, consumers and investors.
LEDs and OLEDs are both playing enormous but different roles in the electronic (or digital) display industry and their markets are expected to expand greatly in the upcoming years. LEDs are increasingly replacing cold-cathode fluorescent lamps (CCFL) for backlighting LCD panels because they are much smaller, easily scalable, brighter and more energy efficient and therefore produce such higher-quality thinner screens as those seen in Samsung or LG TVs and Apple's (NASDAQ:AAPL) iPhones and iPads. According to Display Search by the NPD Group, Inc., the market penetration for LED backlighting in large screens (10" plus) will be nearly 100% by 2016, an increase of 25% from today. ("Key Component Shortages Limiting Growth of LED Backlight Units for LCD TVs") The percentage boost in revenue may be higher if demands for TVs and notebook PCs increase and if price reductions don't become too severe. Both scenarios could be likely despite the current pessimism for notebook PCs and price pressures.
OLEDs on the other hand can be more than just backlight sources and in fact the usage of OLEDs as pixels directly emitting light in digital displays avoids the need for any backlighting. They utilize either passive-matrix (PMOLED) or active-matrix (AMOLED) schemes and produce darker black levels and much thinner screens compared to an LCD. AMOLED displays, in particular, can be made very thin because thin-film transistors can be integrated with the pixels that produce vibrant and stunning colors. For most indoor settings at relatively low ambient light conditions, an OLED display provides a much higher contrast ratio than LCDs that use LED or CCFL backlighting. Furthermore, OLED screens can be made flexible and therefore curved phones and TVs can be constructed when desired. However, OLED screen sizes are currently limited due to high production costs and certain inherent disadvantages including lower efficiency, short lifespan and susceptibility to high humidity and temperatures. Samsung is the lead producer for AMOLED panels making over 90% of total such displays worldwide, primarily due to their smartphone, cameras and phablet products. LG Displays and Sony (NYSE:SNE) also have OLED and AMOLED products in the market.
Although LEDs have higher efficiency, higher lifespan and can withstand high humidity and temperatures compared to OLEDs, LEDs cannot be used as pixels in displays for close-up viewing of high-resolution pictures because high pixel density cannot be achieved due to the diode chip size being too small within a discrete LED module and the challenges associated with packaging them densely. However, high-resolution picture viewing from a distance of about 100 ft. or higher is possible with pixel pitches of 10 mm or higher, which are easily achieved with discretely packaged LED and are commonly used in electronic billboards seen in roads, highways and sports arenas. OLEDs are not used for such displays because these are typically for outdoor applications that require very high brightness (higher than 10,000 nits) and durability. Clearly then, LEDs and OLEDs play distinct roles in the display industry and both markets are rising rapidly as they replace older technologies and enable new applications due to their electronic compatibility.
While the display industry utilizes OLEDs and LEDs as direct and indirect light sources to construct static and full-motion color pictures, they are not always suitable for general lighting. Although commercial LEDs are now more efficient than incandescent and even fluorescent lamps, the overall system efficacy and light properties of LED replacement lamps are still inferior. This is largely because LED or OLED-based lighting includes glare and lacks ability to generate omnidirectional light radiation. While inorganic LEDs produce much higher glare than their OLED counterparts, OLED-based lamps are still not as comfortable as incandescent lamps. The glare issue is still not fully recognized or understood by the LED industry. I have long been fascinated by light characteristics from various perspectives including science, art and human psychology and in recent years worked on bridging the gap between the LED and traditional lighting industries. I have discovered that doing so requires explaining light in scientific and mathematical terms as well as understanding why certain objects appear comfortable and beautiful when illuminated by incandescent lamps still made by General Electric (NYSE:GE), Osram and Philips (PHG). This in fact led to further research and my book, Understanding LED Illumination (CRC Press - Taylor & Francis Group, August 2013, 272 pages), which provides a new theory describing why LED lights have glare. It also offers new insights and novel techniques to improve LED illumination. It is fascinating to learn that the theater and television lighting expert Imero Fiorentino, who recently passed away, also found the incandescent lamp illumination beautiful and distinct from other light sources such as fluorescent. Incandescent lamps are not only glare-free but also provide the right color and intensity balance over 3D space. In order to solve the glare problem, various manufacturers are using diverse secondary optic techniques and thus adding to the many challenges already faced by the solid-state lighting (SSL) standard communities, further delaying broad LED lighting market penetration.
The ongoing improvements in LED and OLED technologies are creating opportunities as well as challenges for the lighting and display markets. To maximize opportunities, it is important that LEDs and OLEDs not compete for the same markets for display as well as illumination applications. As such, their lighting characteristics, such as efficiency and brightness, should not be compared in general because these depend on the end-to-end system requirements for which such parameters as total light power and color properties must remain the same. For now, LEDs and OLEDs are suitable for niche applications and to gain acceptance for general illumination, they must overcome manufacturing challenges that are not expected to be resolved easily or quickly. Still, NPD predicts that LEDs will account for a quarter of global lighting market by 2016, up from only 5% in 2012. ("LEDs to Account for a Quarter of Global Lighting Market by 2016"). Although Japan and China are expected to lead this growth, I believe North America will resist such conversion because of lighting quality factors and added costs for replacements.
Disclosure: I am long ALU, SNDK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.